Mortgage Refinance Decision Flowchart
Last Reviewed: August 2026
Should You Refinance Your Mortgage?
Refinancing your mortgage can lower your interest rate, reduce your monthly payment, or help you achieve other financial goals. However, refinancing is not always the right move. Closing costs, loan terms, and how long you plan to stay in your home all affect whether refinancing makes financial sense.
This flowchart helps you determine whether refinancing your mortgage may be beneficial. It walks through the key questions homeowners should consider before applying for a new loan.
How to Use This Flowchart
Start at the top of the flowchart and answer each question based on your current mortgage and financial situation. Follow the arrows until you reach a recommendation.
The flowchart considers your current interest rate, the rate available today, estimated closing costs, and how long you expect to remain in your home. It also reviews whether your primary goal is lowering your monthly payment, shortening your loan term, or accessing home equity.
As you work through the flowchart, compare the total cost of refinancing with your expected monthly savings. Calculating your break-even point can help you determine whether refinancing is likely to save money over the time you expect to own the home.
Use this flowchart as an educational guide. Mortgage rates, lender fees, and your financial goals all influence whether refinancing is the right decision.
Why This Decision Matters
Refinancing can create meaningful savings when interest rates decline or your financial situation improves. Lower monthly payments may increase your cash flow, while a shorter loan term may help you pay off your mortgage sooner and reduce total interest costs.
However, refinancing is not free. Closing costs can reduce or eliminate the potential savings if you move or sell your home before reaching your break-even point. Extending your loan term may also increase the total interest you pay over the life of the loan, even if your monthly payment decreases.
Before refinancing, consider how the decision fits into your overall financial plan. Reviewing your mortgage alongside your retirement savings, debt, and long-term goals can help you make a more informed decision and maximize the value of your home financing strategy.
Still Have Questions?
Not every situation fits neatly into a flowchart. Our team of Certified Financial Planners® is here to help.
